New orders have also declined 22 per cent to Rs 838.3 crore for the current year, compared with Rs 1,073.2 crore last year. According to a company release, the decline is a result of the economic slowdown. A marginal increase in orders from power generation, transmission and distribution, and railway transportation systems offset this to some extent. A major reason for the lower losses reported this year is decline in interest cost from Rs 124.3 crore for the 18-month period last year to Rs 46.6 crore. Better asset management and lower borrowing costs contributed to this decline.

The lower losses reported this year are a result of a restructuring exercise carried out by the company. A voluntary retirement scheme (VRS) hasreduced the size of the workforce from 5,775 employees last year to 5,228 employees at present.

The company has launched a four-point restructuring programme which includes rationalisation of business processes and introducing various efficiency improvement programmes. The company will also focus on optimisation of manpower with a focus on building intellectual capital.

Among the new investments made this year is Siemens Semiconductors, a 70:30 joint venture between Siemens Components Singapore and India, a facility at Keonics in Bangalore estimated to cost Rs 30 crore and a medical equipment facility in Goa. The company has also started work on the Aurangabad factory which will manufacture extra high voltage switchgear.

According to executive director W Kroll, factories remain a cause for concern and the company is looking for future oriented solutions.

INSIGHT

-- results reflect restructuring efforts

Siemens' restructuring efforts are reflected in its results, although the company hasshown a negative growth rate in turnover. The loss has been lower than the previous year's. The company has managed to curtail the losses, which stood at Rs 131.7 crore for the 12-month period ended September 1997, to Rs 56.02 crore for the year ended September 1998. The improvement of Rs 75.68 crore in the bottomline is mainly because of Rs 77.71 crore savings in interest. This has been possible mainly on account of the preference capital of Rs 107 crore issued by the company as well as stretching of the credit term by its parent company.

On the operational front margins of the company have improved slightly from 2.57 per cent to 2.80 per cent. Further, the operational performance of Siemens has been badly hit by recession. Thus it is the financial restructuring that has resulted in the better performance. Operational performance is yet to be reflected in the company's results.